FocusLow demand triggers China DEG fall

12 July 2007 11:12  [Source: ICIS news]

SINGAPORE (ICIS news)--China’s diethylene glycol (DEG) prices have fallen on lower demand caused by the shutdown of unsaturated polyester resin (UPR) plants in the Wuxi area in eastern China, said buyers and sellers on Thursday.

 

Domestic prices in eastern China were heard at yuan (CNY)9,150-9,200/tonne ex-tank ($1,210-1,217) on Wednesday, down CNY100-150/tonne from last Friday’s price of CNY9,300/tonne based on global chemical markets intelligence service ICIS pricing.

 

Two thirds of China’s UPR factories are located in eastern China and the recent closure of these plants have resulted in a softening demand for feedstock DEG, said producers and traders.

 

“The factories are still closed and no-one has any idea when they’ll be reopening,” said a DEG producer based in Shanghai on Wednesday.

 

This was in addition to the 71 chemical plants that were shut down earlier by authorities to reduce the pollution of Lake Tai in June.

 

“The market has been very quiet of late. A lot of DEG is sitting in the storage tanks of Zhangjiagang and Jiangyin ports in eastern China with no takers in sight,” said one trader.

 

UPR plants have been shut on concerns that recent flooding in the area would exacerbate the pollution of clean water.

 

“Many small factories which were not equipped with waste management systems began to cease operations on Monday when they realised that their factories’ waste might spill into the flood waters that eventually run off into Lake Tai,” said a Wuxi trader in Mandarin.

 

Heavy rain in most parts of Jiangsu province in eastern China over the weekend of 7-8 July resulted in floods.

 

“It started raining on Saturday morning and lasted until Monday evening. The city’s drainage system could not handle the volume of rain water and the water eventually came up to a height of 30 centimetres,” said Zhao Lee Ming, a trader based in Jiangsu.

 

As many as 2,150 small chemical plants located within the proximity of Lake Tai in the Wuxi area would be shut down by the end of 2008 the provincial government said on Monday.

  

($1=CNY7.56)

 

(Ailsa Gao and Kew Jia Hui contributed to this article)

By: Hong Chou Hui
+65 6780 4359

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